The Green Ribbon

The Brexit bonanza for border smugglers

As Theresa May meets with representatives of the devolved governments of Scotland, Northern Ireland and Wales today, one key issue she will have to consider is the status of the Irish border after Brexit. Despite Westminster's focus on controlling the movement of people, the movement of goods could be an equally thorny problem

The issue was highlighted recently in a parliamentary question from the Ulster Unionist MP for Fermanagh and South Tyrone:

Tom Elliott: I appreciate the Secretary of State’s point about an open border with the Republic of Ireland, given that four counties of the Republic of Ireland border my constituency, but how does he envisage stopping the smuggling that may take place after Brexit?

David Davis: That is a very good and difficult question. The simple truth is that we have to make a judgment, as is the case with all borders of that nature. Norway and Sweden have a good example of an open border, as do Canada and America. There are small-scale movements, but big-scale movements can be found and dealt with.

There may be good reasons for the Brexit Secretary's preference for an open border given the basic difficulty of mounting physical controls. This is what the British Army had to say on the matter in its review of Operation Banner, it's deployment to Northern Ireland during the Troubles: 

Stymied at Stormont

Brian Feeney has some interesting thoughts today on the paralysis of the Stormont Assembly, and particularly on Nigel Dodds' rejection of an all-island investment body:

Faced with a range of experienced financiers and economists the said Mr Dodds drew on his own vast expertise as a unionist nay-sayer and said, you've guessed it, "No". Northern Ireland's "interests would not be best served by a merger of INI and IDA. The reality is that we are competitors. The priority is to make the most of our assets and advantages".

Could he make a list of them? Is this the same Nigel Dodds who was up in the north-west last month with Micheal Martin agreeing a joint INI-IDA cross-border project for technology in Derry and Letterkenny funded by the EU Interreg programme?

One of the many sad aspects of Mr Dodds's predictably narrow-minded summary dismissal of Dr Gillespie's suggestions is that no-one else on the executive got a chance to say a word. It's too much to expect the executive to discuss the issue. (Irish News, via Nuzhound)

It's worth recalling that Sinn Fein had the opportunity to take Dodds' Enterprise brief but passed it up in favour of the joys of education, precisely the kind of decision that may yet create a political space for Fianna Fail in the north.

As things stand it's heartening that the momentum for an all-island economy is as strong as it is.

Salmond and Paisley unhappy with spending deal

Mark Devenport brings us news that the devolved administrations are not happy with Alistair Darling's spending settlement:

Alex Salmond met Ian Paisley at Westminster this afternoon. He claims NI and Wales are just as upset as he is about the Comprehensive Spending Review and they intend to work together to try to get a better deal...

FURTHER UPDATE: This evening the Finance Department confirmed that Peter Robinson had discussed the spending review with his Scottish counterpart and they hope to meet the Treasury soon, either separately or together. (Devenport Diaries)

(The Campaign for for an English Parliament reckons the dispute reflects the Barnett consequentials of a cut that was barely noticed when it was applied in England.)

Call for all-Ireland investment body

Today's Irish Times carries a very significant article by the chairman of Ulster Bank, Dr Alan Gillespie, calling for the creation of a new all-Ireland investment agency.

Dr Gillespie expresses strong support for an all-island corporation tax rate, but suggests that the UK Treasury's Varney review will probably only offer marginal concessions, so that a plan B is necessary.

I believe that to market Northern Ireland effectively we should align the inward investment marketing activities of Invest NI (INI) with the Republic of Ireland's IDA. We should promote an all-island economy through a single, joined-up effective agency with the IDA and INI no longer competitors but merged and fully collaborative. (Irish Times)

There are a number of sensitivities around this proposal as the Irish Times own commentary points out:

Varney's tax offer: a poisoned chalice?

Colm Heatley has a useful round-up of the outlook at Stormont in the next few months. In particular, he has a scoop on the Varney review:

Sir David Varney, the man appointed by British prime minister Gordon Brown to head an economic review into the North, will next month make his findings public. What Varney says will go a long way to shaping the work and the nature of the Assembly.

The key question for Varney, at least in the eyes of politicians and businesspeople in the North, is the rate of corporation tax. Varney has already ruled out a 12.5 per cent rate, which would have brought the North in line with the Republic, but sources close to him say he is poised to recommend a ‘halfway house’ option.

According to the sources, Varney is considering an option which would allow businesses registered in the Republic to move some of their operations to the North and have corporation tax levied at the 12.5 per cent rate.

That money would go into the Republic’s coffers, while income tax paid by the company’s employees would go to the British exchequer. (Sunday Business Post)

Alexander says yes to fiscal autonomy

Pat Kane of Scottish Futures has a very interesting post over at OurKingdom on Wendy Alexander's first press conference as Scottish Labour leader elect.

The old Labour slogan of “Scottish solutions for Scottish problems” became “Scottish solutions for Scottish aspirations”, explicitly recognising how the optimistic, democratic-nationalist agenda of the SNP has tapped into a desire for positive politics, and how Labour failed when it tried to portray independence as a potential plagues-of-locusts disaster. More interestingly, in subsequent discussions Alexander pronounced herself “relaxed” about the repatriation of broadcasting and media to Scotland, an increase in fiscal autonomy for the Parliament, and other increased powers picked out by chapter two of the SNP Government’s  White Paper on Independence. Or at least, relaxed about the “national conversation” around these issues  taking place. (OurKingdom)

The Scotsman has a particularly intriguing account of Alexander's position on the financial issue:

Aer Lingus flies into controversy

Aer Lingus' decision to withdraw its Heathrow service from Shannon in favour of Belfast has produced an interesting clash between high and low  politics, the grand vision of the all-Ireland economy on the one hand, and the more parochial perspective that is the daily bread of Irish democracy on the other.

David McWilliams takes the former view:

you cannot have your cake and eat it. We can't aim to have a political say in the North without accepting that the logical next step will be Southern investment in the North.

Put simply, we can't seek to end partition politically and try to uphold partition economically.

In the Belfast Agreement, which the vast majority of us voted for, we claimed that every person born on this island was entitled to an Irish passport and was, if they choose, an Irish citizen.

Logically therefore, those politicians who are arguing that Aer Lingus is abandoning the Irish citizens of Shannon, in favour of the Irish citizens of Belfast are being partitionist.

The reason this is an important point, and not a piece of smart arsey, is because over the coming years, Southern businesses will move to Belfast.

This is what happens when opportunities arise and when commerce is unimpeded. (Irish Independent)

Paddy Murray takes the other side of the argument in the print edition of the Sunday World:

The North/South divide

The Institute for Public Policy Research has released details of a forthcoming study which shows that the North-South divide has grown during 10 years of Labour government:

ippr north’s report cites Government figures that measure the gap between regions. These figures show that since 1997, the North East, the North West, Yorkshire and Humberside and the Midlands have all moved further away from the national average, on the Government’s favoured measure of output per head (known to economists as ‘Gross Value Added’). Over the same period, London has out paced the rest of Britain. (ippr)

The figures in the release also appear to show that the positions of Scotland, Wales, and Northern Ireland have deteriorated slightly as well.

Gross Value Added (GVA) per head by region

	1997	2005
United Kingdom	100	100

England	102	102
Wales	81	78
Scotland	99	96
Northern Ireland	81	80

Bunting on NI Corporation Tax

It appears that Gordon Brown has set his face firmly against giving Northern Ireland a 12.5 per cent corporation tax in spite of a formidable campaign.

Not everyone in the North thinks a regional corporation tax rate is the way forward in any case. Peter Bunting of the Irish Congress of Trade Unions has delivered a strong critique of the campaign for a cut. He makes a formidable argument, but let me try and point to some weaknesses.

There are fewer than ten PLCs in NI, ten firms account for over 50% of NI exports and the region has the second-lowest level of business formation in the UK. Most private sector economic activity is carried out by companies that pay the reduced corporation rate of 19%. Only 4% of NI companies pay the full 30%, although this sector dominates the Industrial Task Force, which commissioned the ‘independent study’ that found, among other claims that 180,000 new jobs “could” be created by 2030 and that growth “could” be doubled. (ICTU)

Surely this is precisely the point. Part of Northern Ireland's problem is that it is failing to attract precisely the kind of companies that would pay the full rate of corporation tax.

Devolved finance ministers meet Treasury

Interesting news from the Western Mail:

Chief Secretary to the Treasury Andy Burnham held a meeting earlier this week with Assembly Budget Minister Jane Hutt and their counterparts from Edinburgh and Belfast.

The Cardiff meeting, which was not publicised, discussed general funding issues for the devolved administrations. (ICWales)